Emirates Airline celebrated the
opening of the new terminal at the New Delhi airport last year
by flying in an Airbus SAS A380.

The plane has not returned there since. India’s government
has not acted on requests to change regulations that bar
overseas carriers, including Emirates and Deutsche Lufthansa AG (LHA),
from flying aircraft bigger than the Boeing Co. 747 into the
country. That rules out the A380.

The two airlines are eager to tap India’s growing travel
market with the A380, the world’s biggest passenger aircraft.
They have run up against policies that protect state-owned Air
India Ltd., according to Rishikesha Krishnan, a professor of
corporate strategy at the Indian Institute of Management in
Bangalore.

“All these measures are to shore up Air India and they
completely distort the market,” said Krishnan, who writes
papers about India’s aviation industry. “They are all misguided
restrictive practices and not in the best interest of Indian
aviation.”

The rules deny more choices for passengers and reduce
competition for Air India, Krishnan said. The carrier merged
with state-owned Indian Airlines in 2007 and has received 20
billion rupees ($449 million) of public funds since April 1,
2009.

Cost Advantage

Nasim Zaidi, secretary at the Ministry of Civil Aviation,
declined to comment when asked if the government was delaying
A380 approvals to help Air India. An Air India spokesman
declined to comment, and Air India Chairman Arvind Jadhav did
not respond to two calls to his mobile phone, calls to his
office and e-mailed questions.

The A380 offers a “significant cost advantage to airlines,
allowing them to price tickets cheaper,” said Amber Dubey, a
Gurgaon, India-based director at auditing and consulting company
KPMG. “That’s the reason some Indian carriers are concerned.”

Lufthansa, which flies to seven destinations in India with
52 weekly flights, is ready to operate the A380 to New Delhi as
soon as India allows the service, the airline said in an e-mail
response to questions.

‘Hugely Popular’

Emirates, owner of the world’s largest fleet of A380s,
anticipates strong demand for the superjumbo in the country, Tim Clark, president of the airline, said in an interview.

“We want to take the A380 to India. It would be hugely
popular,” Clark said. “Our expansion plans depend on the
Indian government -- they make the call on whether we can
increase our frequencies.”

The A380 can seat 525 people in a typical three-class
configuration, while a similar Boeing 747 can fly 416 people.
The A380 has a wingspan of 262 feet (80 meters) and stands
almost 80 feet tall from the ground to the top of its tail.

Airports across India, including New Delhi’s, have
undergone renovation and runway extensions to accommodate the
A380, said V.P. Agrawal, chairman of the state-run Airports
Authority of India. Delhi’s airport added three gates -- 15, 17
and 19 -- specifically meant for the plane.

“Delhi and Hyderabad airports are built exactly to the
requirement of an A380,” Agrawal told Bloomberg July 14. “A380
operations from Delhi were not permitted. I’m not sure why, but
maybe others see a threat.”

Lucrative Routes

Airports in Mumbai, the southern city of Chennai and
Kolkata in the east can also handle the plane, Agrawal said.
Kingfisher Airlines Ltd. (KAIR), the only Indian carrier to have
ordered the A380, will start taking the plane in 2016, Chairman
Vijay Mallya said June 6.

Allowing Emirates to fly the A380 into India would
intensify competition for Air India on routes to the Gulf, which
are among its most lucrative, said P.C.K. Ravindran, chairman of
Kochi-based Institute of Applied Aviation Management.

“So long as Air India is a state property, the government
will have to take care of its interest,” said Ravindran, who
advises on air projects and has written a book about India’s
regulatory framework. “Air India is not just competing with
Emirates -- it is fighting for room with Etihad, Air Arabia and
RAK Airways, and let’s not forget Indian carriers flying to the
Gulf.”

Flights to the Gulf region, where 2.2 million Indians
migrated for work between 2007 and 2009, accounted for 49
percent of Air India’s overseas services, according to the Civil
Aviation Ministry’s annual report for the year ended in March.

The company also has more immediate problems. It may
receive 17 billion rupees from the government to help the
carrier pay salaries and maintain services, according to a
company official familiar with the matter. Air India is seeking
as much as 175 billion rupees from the government to help reduce
debt and pay for planes on order after posting four years of
annual loss. The airline is working on a financial restructuring
plan to pare debt of 400 billion rupees as of March.

As of April last year, Indian carriers were eligible to
sell 711,356 seats per week on flights to and from 104 countries.
They utilized only 170,914 seats a week, compared with 326,705
seats by overseas airlines, official data showed.

Air India’s struggles have come as foreign airlines nearly
doubled service to and from India in 2010 compared with six
years ago, according to data from the Civil Aviation Ministry.
Boeing expects a market of 1,320 new passenger planes in India
over the next 20 years.